Where Do I Start How Governments Can Use Ai And Data To Unlock Fiscal Space

2026-07-22 · Source: Insights | Tony Blair Institute for Global Change (TBI) · Field: Government & Public Sector — Digital Government & E-Government, Public Policy & Governance, Public Finance & Administration · Depth: Novice, long

Summary

Governments, particularly in low- and middle-income countries, can unlock fiscal space using a "dual-track approach" that combines long-term public financial management (PFM) reforms with a "fast track" leveraging AI, data, and digital tools. This fast track identifies revenue loss and spending leakage quickly by analyzing existing, imperfect data, without waiting for perfect systems. Examples demonstrate significant fiscal benefits: Nigeria saved \$50.5 million by removing 50,000 ghost workers, Ghana saved \$103 million by removing 26,589, and e-procurement reduced bid prices by 6.75%, yielding average annual savings of \$637.9 million for low-income countries. India saved \$8.5 billion on LPG subsidies and \$21.4 billion on false ration cards. Brazil's SISAM customs system, using machine learning, identified 81% of fiscal-classification errors by reviewing the top 20% of import declarations. The approach emphasizes acting on high-value use cases and outlines five tests for opportunity identification and a delivery model.

Key takeaway

For finance ministers facing fiscal pressure, you should adopt a dual-track approach to public financial management. Implement a "fast track" using AI and data to quickly identify and recover revenue loss or spending leakage from existing systems. This creates immediate fiscal space and builds momentum for deeper, long-term reforms. Start with a diagnostic sprint to pinpoint 1-3 high-value opportunities and establish a dedicated delivery task force.

Key insights

Governments can achieve rapid fiscal gains by deploying AI and data on existing systems, complementing long-term PFM reforms.

Principles

• Implement a dual-track approach for immediate fiscal wins and foundational reform.
• AI and digital tools can effectively analyze imperfect, existing government data.
• Treat fast-track initiatives as delivery reforms, not just IT projects.

Method

Apply five tests—fiscal yield, data readiness, delivery complexity, political sponsorship, and coalition for change—during a diagnostic sprint to select 1-3 high-value use cases.

In practice

• Detect ghost workers and ineligible subsidy claims using payroll analytics.
• Enhance tax compliance and customs fraud detection with AI-powered risk scoring.
• Verify projects and assets using GIS data and satellite imagery.

Topics

• AI in Government
• Fiscal Policy
• Public Financial Management
• Data Analytics
• Revenue Intelligence
• Expenditure Control

Best for: Policy Maker, Executive, Consultant

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Editorial summary, takeaway, and curation by AIssential. Original article published by Insights | Tony Blair Institute for Global Change (TBI).